Mayor David J. Narkewicz explains a graph showing net state aid while delivering the bad budget news for fiscal 2014 at a "pizza with the mayor" event at the Northampton Senior Center on Tuesday, March 12, 2013.

Mayor David J. Narkewicz explains a graph showing lost revenue while delivering the bad budget news for fiscal 2014 at a "pizza with the mayor" event at the Northampton Senior Center on Tuesday, March 12, 2013.

Jeffrey Bubar of Northampton, left, raises his hand to ask a question during Mayor David J. Narkewicz's delivery speech of the bad budget news for fiscal 2014 at the Northampton Senior Center on Tuesday, March 12, 2013. John Lyons of Northampton, right, looks on.

NORTHAMPTON — Mayor David J. Narkewicz sounded a warning Tuesday about a $2.4 million gap in next year’s Northampton budget that could mean job cuts and reduced city services.

In kicking off the first of six budget meetings over the next few weeks, Narkewicz laid out a gloomy picture for about 30 residents at the Senior Center.

“I don’t have a sense that people understand, when you say it’s going to be a tough budget year, what that means,” Narkewicz said. “I think it’s important for them to really see it laid out there, starkly.”

The budget gap for fiscal 2014, which begins July 1, is driven by rising costs for health insurance, salary increases and step raises for both school and city personnel, and a minimal increase in the amount of projected state aid.

While cautioning that figures change daily, the mayor said the $1.4 million the city expects to raise in additional revenue next year is far short of the $3.6 million in projected additional expenses. That means all departments are being asked to level-fund their budgets, or keep them at this year’s figures. In most cases, that will mean layoffs and service reductions, the mayor said.

“I know people get frustrated because they say, ‘Oh, they always find the money,’” Narkewicz said. “Some of the money is going to change, but we’re not going to find $3 million in revenue that we missed or savings we can create. The only real way to close the gap is by eliminating services through layoffs.”

There is one other solution — a Proposition 2½ override, as one audience member pointed out.

“I find it remarkable that it hasn’t come up,” resident and former city councilor Mike Kirby said near the end of the mayor’s 90-minute presentation.

Narkewicz did not close the door on an override, but he also did not endorse it on Tuesday.

“I have heard that (override) from people, but you also have to balance that with other costs that people have incurred over time,” Narkewicz said.“So that’s a conversation we’re going to have.”

He added that he was “troubled” at the prospect of cutting school, public safety and other city positions.

The city also is reluctant to tap into reserve accounts that officials have been trying to build up in recent years. Doing so could lead to a lower bond rating, which would have a negative effect on interest rates and could end up costing the city even more money, Narkewicz said.

Possible cuts

On the school side, a level-funded budget will leave a projected gap of $1.475 million. School officials are floating a plan to cut as many as 25 full-time teaching positions. The department also may eliminate bus service to Northampton High School, among other proposals that will be discussed at Thursday’s School Committee meeting.

On the city side, the Police Department would lose four of 51 full-time officer positions.

Other than police, Narkewicz said, an exact number of job reductions has yet to be determined, though some jobs would be lost in general government departments at the City Hall complex.

The Department of Public Works will likely see changes, but not as drastic as a few years ago, Narkewicz said. Changes may include reducing the number of seasonal laborers and dipping into a trust fund to help fund the Cemetery Division. It’s too early to say whether the department will see a cut in full-time positions.

The Fire Department’s force of 65 full-time firefighters won’t be reduced for two reasons. First, the city is obligated to keep the department’s staffing at a certain level in exchange for receiving funds through a federal grant program that pays a portion of some salaries, Narkewicz said.

Additionally, the firefighters union continues to operate under a contract that expired nearly three years ago and, as a result, members haven’t seen the same kinds of raises other union members have.

The stalled contract negotiations are now before an independent state arbitration panel. Narkewicz said the city will have to factor the terms of that ruling into its budget, assuming the City Council agrees to fund it.

In addition to the firefighters’ contract, the city is negotiating new deals with the police patrol and sergeants union for the current and previous fiscal years, and with the schools unions for next fiscal year.

Those agreements would also need to be factored into the budget, Narkewicz said.

Health insurance

As has been the case over the last several years, skyrocketing health insurance costs are leaving the city in a bind.

The cost to insure the city’s nearly 1,000 employees has gone from $6 million a year a decade ago to more than $10 million in the current fiscal year, with no indication the trend will reverse, Narkewicz said.

“This is one of the biggest cost drivers for us,” he said.

The city is facing a 10-percent increase for the coming year, based on initial quotes. That amounts to about $1 million.

Resident Jack Delvin urged the mayor to move the city into the state’s Group Insurance Commission, which he believes will save a considerable amount in health costs.

Narkewicz said the city is in the middle of an in-depth analysis of its health insurance plans and costs, and said the GIC is a part of that study.

“Believe me, you’re pushing on an open door,” he said. “If there’s any way to go into the GIC, I’ll do that.”

The mayor said his office must show that any plan, whether it be the GIC or another insurance carrier, will save the city money. The City Council last fall adopted a local option under the state’s new municipal health insurance reform law that allows the mayor to study the issue as a way to curb health insurance costs.

Timing is also an issue. The GIC only allows enrollment twice a year, meaning the city couldn’t become a member until Jan. 1, 2014.

In addition to health insurance, state aid numbers are also in flux. City officials initially projected a nearly $350,000 increase in state aid based on Gov. Deval Patrick’s fiscal 2014 budget plan. But they’ve lowered those estimates to about $207,000 on the eve of the state House of Representatives budget that’s to be unveiled in early April.

The mayor said several times as people approached him after Tuesday’s presentation that “this story doesn’t have a happy ending” unless circumstances change significantly in the coming weeks.

The mayor’s town hall-style meetings continue tonight at 7 at Leeds School cafeteria, Monday at Bridge Street School library and next Wednesday, March 20, at Northampton High School Little Theater.

NORTHAMPTON — For the second time in three years, the City Council is urging the state to adopt a “fair and equitable” tax code in hopes of increasing state aid that the city has seen fall by $4 million in the last decade. The council approved a resolution earlier this month, by a vote of 7-2, that urges the Legislature …